TSI
Housing lending falls overall in Australia but up slightly for new homes
The number of loans to owner occupiers, excluding refinancing, declined modestly in February in Australia, according to the latest figures from the Australian Bureau of Statistics. However, the number of loans to those purchasing and building new homes increased by 2% which the Housing Industry Association, the voice of the residential building industry, said is encouraging. ‘This is a relatively positive result against a backdrop where lending to households purchasing existing homes eased back modestly,’ said Geordan Murray, HIA economist. Overall the number of loans to owner occupiers buying established homes, excluding refinancing, fell by 0.9% in February to a level 4.9% weaker compared with the same time a year ago. ‘Lending figures indicate that the investor market eased by around 3.4% during February, but remained around 9.9% higher than the same period a year ago. The majority of the growth in investor lending has been to those purchasing existing homes. In February over 90% of lending to investors went into the existing home market,’ explained Murray. He pointed out that lending activity in the first home buyer market remained quite weak. The number of loans to first home buyers in the three months to February 2015 was around 8.2% lower than the corresponding period a year earlier,’ he added. A breakdown of the figures shows that the total number of owner occupier loans for new housing in February 2015 compared with February 2014 shows that only Victoria and Tasmania recorded growth at 3.2% and 71.7% respectively. Elsewhere, there were declines with a fall of 0.4% in New South Wales, Queensland down 1.7%, South Australia down 17.4% and Western Australia down 12.8%. Continue reading
Average UK home changes hands every 23 years, new research shows
The average home in the UK changes hands every 23 years and while this may seem not very often it is almost three times longer than in the 1980s, new research shows. The low housing turnover is driven by people buying their first homes later, a larger private rented sector and the baby boomer ‘hoarding effect’, according to the annual report from the Intermediary Mortgage Lenders Association (IMLA). The report, which examines trends in the mortgage and housing markets in order to assess the strength of the post-recession recovery, also shows that annual turnover of the private housing stock fell from over 12% to 4.5% over the last three decades. As a result, IMLA’s analysis indicates the average home currently changes hands once every 23 years compared with every eight years during the 1980s. The IMLA report argues that low housing turnover is driven by a combination of people buying their first homes later; by a larger private rented sector where turnover is lower; and by the baby boomer ‘hoarding effect’ where middle aged home owners are staying put, tying up a large part of the housing stock. These factors are likely to keep turnover down for the foreseeable future, potentially limiting mortgage lending and restricting access to existing properties. IMLA’s analysis also shows the estimated contribution of mortgage finance to the total value of UK housing transactions hit a new all-time low of 41.7% last year. It means just £4.17 of every £10 spent on house purchases in 2014 was funded by mortgages while cash or equity made up £5.83 or 58.3%. Despite forecasting a slight increase in gross mortgage lending over the next two years, the IMLA expects the estimated contribution of cash, including deposits and cash purchases, to housing transactions will exceed 60% for the first time on record by 2016. ‘These figures paint a picture of a housing market where turnover has drastically slowed in the last thirty years. Quite simply, in the absence of a sustained rise in housebuilding and improved affordability and turnover, the fact that properties are coming onto the market less frequently severely limits the scope for would-be first time buyers to graduate to owning their own homes,’ said Peter Williams, IMLA executive director. ‘Inertia in the property market spells danger for future owner-occupation levels, and the growing influence of cash and equity is sowing the seeds of a permanent social divide. Having said that, we will see some continued growth in mortgage lending and as the market stabilises and wages rise, we may also start to see affordability improving,’ he added. The report also assesses how the mortgage market recovery has been tempered in the last year by worsened housing affordability and tighter lending restrictions since April’s implementation of the Mortgage Market Review (MMR) and October’s macro-prudential changes prompted by the Financial Policy Committee (FPC). While gross mortgage lending was running 36% up year on year in January 2014, it was… Continue reading
UK landlords get confused over betterment principle, study finds
Some 60% of landlords in the UK admit they don’t understand the betterment principle, whilst 90% say they fully understand fair wear and tear, according to a new report. The betterment principle means that if an item, such as a carpet was old at check-in, the landlord can’t replace it with a new carpet, but some compensation is allowable towards the item. The research from My Property Inventories also shows that over 80% of landlords said inventory evidence helped them to win a tenant deposit dispute. Furthermore, 60% of landlords admit to never visiting their properties to check the condition, while just 6% say they regularly make spot checks on their property. ‘We do find that landlords and agents push for new for old at the end of tenancies, and have unrealistic expectations of what they can claim against tenant deposits,’ said Danny Zane, director of My Property Inventories. He explained that the tenant has a duty of care to return the property in the same condition at the end of the tenancy, as at the start and listed on the inventory report, with an allowance for wear and tear. The law does not allow landlords to claim ‘new for old’ from the tenant deposit. ‘The key problem is that agents, landlords and tenants have different expectations when it comes to fair wear and tear issues. There is a distinct difference between fair wear and tear and actual damage. For example, carpet tread will flatten over time where there has been foot traffic, but cigarette burns, stains or soiling will incur a charge,’ said Zane. He pointed out that the betterment principle applies to cleaning issues too. ‘If a carpet was stained and marked at the time of check-in, a landlord can’t expect the tenant to pay for carpet cleaning at the check-out, no matter how long the tenancy has been,’ Zane explained. ‘However, if the carpet was recorded in the unbiased inventory report at the start of the tenancy as clean, with accompanying photos and is found to be stained or marked at check-out, the cleaning costs can be deducted from the deposit,’ he added. The firm believes that it is important to note that normal wear and tear is a fact of life within tenancies. ‘The best way for landlords and agents to ensure that the property’s condition is fully recorded at the start of the tenancy, is by having a thorough and professional un-bias inventory, along with a detailed check-in and check-out report,’ Zane concluded. Continue reading
